United States v. Bornstein
Annotate this Case
423 U.S. 303 (1976)
U.S. Supreme Court
United States v. Bornstein, 423 U.S. 303 (1976)
United States v. Bornstein
Argued October 8, 1975
Decided January 14, 1976
423 U.S. 303
A prime contractor (Model) had a contract with the Government to provide radio kits containing electron tubes meeting certain specifications. A subcontractor (United), which was to supply the tubes, sent to Model in three separately invoiced shipments tubes that were not of the required quality but were falsely marked to indicate that they were. The radio kits that Model in turn shipped to the Government contained 397 of these falsely marked tubes. Model then sent 35 invoices to the Government for the kits, each invoice including claims for payment for the falsely marked tubes. After the Government discovered the fraud, it recovered in settlement from Model $40.72 per tube or a total of $16,165.84. Subsequently the Government sued United and two of its owner-officers (respondents) under the False Claims Act (Act), which provides that the Government may recover from a person who presents a false claim or causes a false claim to be presented to it a forfeiture of $2,000 plus an amount equal to double the amount of damages that it sustains by reason of the false claim. The Government alleged that United was liable for 35 $2,000 forfeitures, one for each invoice that it "caused" Model to submit, and also claimed damages of $16,205.54, consisting of a replacement cost of $40.82 per tube for 397 tubes. The District Court agreed that there had been 35 forfeitures, but ruled that before the Government's damages could be doubled, they had to be reduced by the amount of Model's payment to the Government, and accordingly computed double damages at only $79.40 (double the 10-cent difference per tube between its replacement cost and the payment already received from Model). On cross-appeals, the Court of Appeals agreed with the District Court on the double damages issue, but held that, since there had been only one subcontract involved, there should be only one forfeiture.
1. A correct application of the Act's language requires that the focus in each case be upon the specific conduct of the person from whom the Government seeks to collect the forfeiture. Thus,
here United committed three acts that caused Model to submit false claims to the Government -- the three separately invoiced shipments of falsely branded tubes to Model -- and hence is liable for three $2,000 forfeitures representing those three shipments. Pp. 423 U. S. 308-313.
(a) The number of $2,000 forfeitures is not to be measured by the number of contracts involved, since such an automatic measurement, which would almost always result in only a single forfeiture no matter how many fraudulent acts the subcontractor might have committed, would not only contravene the Act's plain language, which focuses on false claims, not on contracts, but would defeat the statutory purpose of punishing and preventing frauds. Pp. 423 U. S. 310-311.
(b) Nor is the number of forfeitures to be measured by the 35 false claims presented by Model to the Government, since this method fails to distinguish between the acts committed by Model and those committed by United, a critical distinction, since the Act imposes liability only for the conduct that causes false claims to be presented. Thus, here, the statute does not penalize United for what Model did, but penalizes United for what it did. Pp. 423 U. S. 311-313.
2. In computing the double damages authorized by the Act, the Government's actual damages are to be doubled before any subtractions are made for compensatory payments previously received from any source. This computation method best conforms to the Act's language, and reflects the congressional judgment that double damages are necessary to compensate the Government completely for the costs, delays, and inconveniences occasioned by fraudulent claims; fixes the defrauder's liability without reference to the adventitious actions of other persons (such as the prime contractor here); and forecloses the subcontractor from avoiding the double damages provision by tendering the amount of the undoubled damages at any time before judgment. Pp. 423 U. S. 313-317.
504 F.2d 368, reversed and remanded.
STEWART, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, BLACKMUN, and POWELL, JJ., joined, and in Parts I and III of which BURGER, C.J., and WHITE and REHNQUIST, JJ., joined. REHNQUIST, J., filed an opinion concurring in part and dissenting in part, in which BURGER, C.J., and WHITE, J., joined,
post, p. 423 U. S. 317. STEVENS, J., took no part in the consideration or decision of the case.